Why investors should start paying attention again to mining – by Ian McGuggan (Globe and Mail – March 8, 2018)


Investors should once again start paying attention to mining. Those are brave words. Over the past decade, mining companies have made a bonfire of shareholders’ hopes. The surest path to outperformance during that period has been to run from anyone wielding a geological map.

But if there was one overarching message to be gleaned from the Prospectors and Developers Association of Canada convention in Toronto, it was that the industry is inching back.

Attendance at the four-day event, which wound up on Wednesday, topped 25,600 people, up about 6 per cent from the preceding year. Meanwhile, the initial public offering of Brazilian zinc miner Nexa Resources SA, which raised just under US$500-million last October, provided real-world evidence that investors are once again willing to put money into the right deal.

But what is still lacking is a new narrative. Fifteen years ago, miners could point to skyrocketing demand from China to boost the case for industrial metals. Ten years ago, they could point to the supposedly inflationary effects of crisis-era monetary policy to bolster the argument for precious metals.

Today, there’s no big, simple story to drive metals prices higher. But there are a number of more specific situations that deserve attention. Here are three key takeaways from the convention:

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